NickIm confused, I know banks lend to each other (LIBOR) but I thought the Bank of England also lent monies to banks as well at their interest rate?So the above example is not complete?1-Where and at what rate do banks get monies lent to them?2-How much margin above do they lend?3- If the base rate is 0.5 and the banks charge you eg 5% for a mortgage if they make the difference ie 4.5% who has the other 0.5?Can anyone share any thoughts on this?

Hi Nick, thanks for this and this is very interesting. I have just googled it and found a million different pages about this.

I understand banks have to deposit with the BoE and the bank get interest on this at 0.5% and the Boe can lend again and charge higher interest rates. But also, from reading on the other pages, they lend to other banks as well i.e. "The rate at which the Bank of England lends to other banks in the UK".

Would the above example be right if the BoE lent at 0.5%? Otherwise if banks make the difference betweem the base rate and what they charge, who has the remainder?

I was wonder if we could have any other input, although it is a complicated topic.

Th Bank of England will be able to offer a far better explaination than me but I broadly agree with Nick's response.

Each regional Bank of England office hosts monthly briefings which are free to attend by invitation. If you would like to be invited please contact stephanie.mason@bankofengland.co.uk or Telephone:0207 601 5711 and tell her that I've introduced you.

The Bank of England is the 'lender of last resort' for the banks; not a bank as we would see it. They control the supply of money into the economy.The banks lent money for the bail out at an average 12% pa. Despite the furore the tax payer stands to make a very attractive return!Lisa

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